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Geisinger Health Pricing Innovations Not Appreciated by Other Health Plans.

For most service industries, standing behind your work is hardly considered to be innovative, nor is it considered a marketplace differentiator. But, healthcare is not most service industries and it is a big deal when a hospital says that it will guarantee its work for 90 days.

That is exactly what Geisinger Health System is doing. According to The Washington Post, Geisinger, located in the coal country of Pennsylvania, offers a 90-day warranty on elective heart surgery, promising to get it right the first time, for a flat fee. If complications arise or the patient returns to the hospital, Geisinger bears the additional cost.

The Post reports that not only does the health system guarantee its work, but heart patients have fared measurably better, and the health system has cut its bypass surgery costs by 15 percent. Today, Geisinger has extended the program to half a dozen other procedures.

One might look at this as a great example of how innovation can lower healthcare costs and improve outcomes. You would think that health insurance carriers would embrace such a system and encourage other systems to adopt similar practices. This is, however, not the case. In fact, Geisinger runs the program through its own insurance unit and only benefits those who are covered by these health plans.

The Post’s article said that other insurers “are not convinced that the savings would be large enough to make it worthwhile for them to renegotiate contracts with the health system. Many still feel more comfortable with the traditional pay-per-procedure approach, even though they run the risk of having to pay thousands of dollars to fix surgeries that go wrong.”

What is even worse is that the Post’s article notes that “most hospitals are also skeptical of Geisinger’s innovation, saying they would lose money by being unable to bill for treatment of patients who must return.”

With health care costs quickly approaching the level where they are a threat to the national economy, it is disappointing to learn that “best practices” like those being demonstrated at Geisinger are not being embraced by the health care industry.

To find out more about Geisinger and how they have developed their guarantee, click here.